Malak Family Centre Inc T/A Malak Family Centre
[2017] FWCA 3656
•11 JULY 2017
| [2017] FWCA 3656 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date
Malak Family Centre Inc T/A Malak Family Centre
(AG2017/1796)
MALAK FAMILY CENTRE AND UNITED VOICE BIG STEPS ENTERPRISE AGREEMENT 2013
Northern Territory | |
COMMISSIONER WILSON | MELBOURNE, 11 JULY 2017 |
Application for termination of the Malak Family Centre and United Voice Big Steps Enterprise Agreement 2013.
[1] On 22 May 2017, Malak Family Centre Inc T/A Malak Family Centre made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Malak Family Centre and United Voice Big Steps Enterprise Agreement 2013 1 (the Agreement).
[2] The application is opposed by United Voice, which is an employee organisation covered by the Agreement.
[3] The application is brought under s.225 of the Act, which provides as follows:
225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
[4] In relation to s.225, the application is made by the employer covered by the Agreement, which passed its nominal expiry date on 30 June 2016.
[5] Section 226 outlines the circumstances upon which I must be satisfied that it is appropriate to terminate an enterprise agreement. That section provides:
226 When the FWC must terminate an enterprise agreement
If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:
(a) the FWC is satisfied that it is not contrary to the public interest to do so; and
(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:
(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and
(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.
[6] The material before me includes the initiating application, and an accompanying statutory declaration signed by the Malak Family Centre Director, Jo Vlassco, filed by the Applicant in support of the application. The Applicant has also filed an outline of submissions setting out the Applicant’s further submissions, drafted, it would appear, so as not only to elaborate upon the reasons for the making of the application, but also to respond to United Voice’s opposition to the application.
[7] The material before me from United Voice includes an outline of submissions, a petition from employees opposing the application, and the witness statement of Bronwyn Channon, a United Voice Lead Organiser.
[8] The material before the Commission on behalf of Malak Family Centre indicates that it employs 8 full-time and 2 part-time staff and that it draws from a pool of 8 casual staff. While covered by the Agreement, casual employees do not benefit from the wages clause, which provides that wage rates for permanent workers (full-time and part-time employees) will be 10% above the prevailing modern award rates. The Applicant’s motivations for applying to terminate the Agreement appear to be largely related to what it sees as the market constraint of the obligation to pay 10% above the modern award rates. Although it has not given a formal undertaking on the subject, the Applicant wrote to each employee covered by the Agreement in April 2017 setting out its proposal to terminate the Agreement:
“Dear …
Malak Family Centre and United Voice Big Steps Enterprise Agreement 2013
As you may be aware, the Malak Family Centre and United Voice Big Steps Enterprise Agreement 2013, expired on 30 June 2016. As with all enterprise agreement, they continue to operate after the expiree date until they are either terminated or replaced by another agreement.
Enterprise agreements are not intended to operate perpetually and it is our intention to apply for the termination of the Agreement as it is now irrelevant and inappropriate to our operational needs. If the Fair Work Commission decides to terminate the agreement, the provisions of the Children's Services Award 2010 and the Educational Services (Teachers) Award 2010 (the Awards) will apply to all employees.
How Will This Effect You?
For existing employees, not much will change.
For existing staff, we intend as follows:
1. Freeze the current agreement rates of pay for existing staff until the applicable award catches up through annual wage increases.
2. Pay an additional 2% to compensate existing staff for the reduction of annual leave from 5 weeks to 4 weeks in line with the Award.
3. Maintain sick leave benefits for existing staff at 12 days per year.
All other provisions of the award will apply and all new employees will be engaged under the applicable award from the date they commence employment.
What Can You Do?
I ask any staff member who has any concerns at all to contact me so I can have an opportunity to discuss any concerns you might have. Can you please contact me by no later than 19 April 2017 as I intend to file the application to have the agreement cancelled after that date.”
[9] The Applicant submits that the only other entitlement that will change with the termination of the Agreement is that existing full-time and part-time staff will have a 15 minute morning and afternoon rest break substituted with the 10 minute break prescribed by the award.
[10] United Voice opposes the application. It submits that 78% of staff (14 of 18) have recorded their opposition in writing and puts forward that the opposition of the employees, as well as their union, should be taken into account by the Commission for the purposes of s.226(b) of the Act. It submits more broadly that termination of the Agreement will have negative effects on employees, both as to their loss of the benefit of wages at a constant standard above the modern award, as well as the loss of their bargaining position for a replacement enterprise agreement, as well as termination being contrary to the public interest.
[11] The construction of s.226 was considered in detail by the Full Bench in Aurizon Operations Limited & Others. 2 Section 226(a) requires a consideration of whether termination of an agreement is not contrary to the public interest, which involves something distinct from the interests of the persons and bodies covered by the agreement.3 The section clearly requires the interests of persons or bodies covered by an agreement to be taken into account, and while those interests are considered separately from the question of the public interest, they may be similarly affected.4
[12] In forming a view about the matters within s.226 the Commission may also have regard to the object of the Act “to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians”. However, there is nothing in the structure or content of the Act to suggest that its object is to be exclusively or primarily to be achieved by enterprise level collective bargaining. 5 While enterprise level collective bargaining is recognised as one part of s.3, which sets out the object of the Act, the object of the Act should be read as a whole;6 and the provisions of s.171, which sets out the objects of Part 2 – 4, dealing with enterprise bargaining, do not qualify or restrict the termination power provided for within s.226.7 There is nothing inherently inconsistent with the termination of an enterprise agreement that has passed its nominal expiry date and collective bargaining in good faith; nor is there anything incompatible with the termination of an agreement and the continuation of collective bargaining in good faith for an enterprise agreement that delivers productivity benefits.8
[13] Section 226(a) requires consideration of whether termination of the Agreement may be contrary to the public interest. The evidence before the Commission about the Agreement is that it applies to no more than 18 employees at a single child care centre. There is nothing within the Agreement which would indicate that there would be an impact of termination broader than the direct employer and employees. There is no evidence that its termination would not have any particular impact on the surrounding economy or community. There is also no evidence that termination would be a precedent for any other applications currently before the Commission or potentially before the Commission. There is no evidence before the Commission that termination of the agreement would disturb the object of the Act.
[14] Accordingly I am satisfied that it is not contrary to the public interest to terminate the Agreement.
[15] Section 226(b) requires consideration of two matters. The first of those relates to the views of the employees, the employer and each employee organisation covered by the agreement.
[16] Plainly, through its application and submissions, the Malak Family Centre support the termination of the Agreement.
[17] On the other hand, the Centre’s employees and United Voice strenuously oppose the granting of the application. Whereas United Voice points to 78% of staff opposing the termination of the Agreement, that in itself is neither unusual nor determinative of the application. Nonetheless I have taken into account that employees oppose the termination of the Agreement.
[18] The second of the matters required to be considered by s.226(b) relates to the circumstances of the employees, employers and organisations covered by the agreement.
[19] In this respect the evidence before the Commission about the direct circumstances of both the employer and employees is somewhat slight. However the evidence that is before the Commission allows a finding that, on the one hand the employer would potentially benefit in the medium term from termination of the Agreement as new employees come into the workplace and Malak Family Centre would be able to pay wages at the level of the modern award. On the other hand the circumstances of current employees would potentially have their existing wages protected through the advice given to them in the 11 April 2017 correspondence from Malak Family Centre; however new employees would be offered lower wages than the Agreement but equal to or greater than the modern award. I consider that the circumstances of employees would be assisted if the matters set out to employees in the Malak Family Centre’s 11 April 2017 correspondence were the subject of a formal undertaking.
[20] United Voice also put forward that termination of the Agreement may affect their bargaining position for a new agreement. Whereas United Voice provided notice to Malak Family Centre in September 2016 that they wished to commence bargaining, that notification appears not to have been actioned any further by the union and accordingly bargaining has not commenced. In all the circumstances I am unpersuaded that termination of the Agreement will affect either the prospect of commencement of bargaining for a new agreement or the bargaining strength or position of either side in any way.
[21] Having considered the criteria within s.226 I am satisfied that the Commission must terminate the Agreement.
[22] However before doing so I consider it appropriate to require that Malak Family Centre provide a formal undertaking to the Commission in relation to the matters set out in its 11 April 2017 correspondence, and in particular that the employer will, for existing staff;
“1. Freeze the current agreement rates of pay for existing staff until the applicable award catches up through annual wage increases.
2. Pay an additional 2% to compensate existing staff for the reduction of annual leave from 5 weeks to 4 weeks in line with the Award.
3. Maintain sick leave benefits for existing staff at 12 days per year.
All other provisions of the award will apply and all new employees will be engaged under the applicable award from the date they commence employment.”
[23] Those matters are to be set out in a signed undertaking to the Fair Work Commission and are to be provided within seven days of the date of this decision. Once an undertaking in appropriate terms has been received by the Commission an order terminating the Agreement will be issued.
COMMISSIONER
Appearances:
Mr D Morphett, paid agent, for the Applicant.
Ms D Yali on behalf of United Voice.
Hearing details:
2017.
Melbourne (by telephone):
6 July.
1 AE404908.
2 [2015] FWCFB 540.
3 Ibid [129].
4 Ibid [131].
5 Ibid [143].
6 Ibid [148].
7 Ibid [150].
8 Ibid [151].
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